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Human Nature Review 2002 Volume 2: 233-235 ( 19 June )
URL of this document http://human-nature.com/nibbs/02/rossi.html
After Capitalism: From Managerialism to Workplace Democracy
by Seymour Melman
Alfred A. Knopf, 2001. 511pp.
Reviewed by James M. Rossi.
Few topics inspire as much fervor and unprincipled rhetoric as capitalism. Free market barons trumpet the faceless expansion of multinational corporations and lambast any environmental or labor regulation as an undemocratic assault on economic freedom. Critics of capitalism, on the other hand, have become as taboo in mainstream media as frank discussions of sex were during the Production Code.
The latter group boasts Seymour Melman, a professor of industrial engineering at Columbia University, who has long criticized American capitalism as alienating, militaristic, increasingly inequitable, and economically inefficient:
The ideologues of capitalism and the market economy tell us that there can be no alternative to state capitalism, and no alternative to its inevitable components ― deindustrialization and militarism... ...The cheerleaders for U.S. state capitalism, with their mantra 'there is no alternative,' can be countered with a well-formulated perspective that replaces managerial hierarchy with workplace democracy as the organizing principle of production... ...Systemic change toward workplace democracy has a further secret weapon. It can increase the productivity of capital without alienating it at all [390, 392].
Melman finds state capitalism [as he describes the American system] to be disquietingly similar to Soviet communism. Both spawn vast bureaucracies dependent on military spending at home and abroad for economic growth; both attract talent and resources away from civilian pursuits; and both develop huge conglomerate commercial enterprises which have monopolies or near-monopolies in their sectors, inextricably linked with government and policy.
Some readers may find Melman's economic assessment too dire, his tone too strident, or his writing too verbose ― and they may be right. But this is still a very good book. To any educated observer with even a hint of objectivity, the American socio-economic system has serious problems: “depletion of production and employment in both capital and consumer goods, a growing dependency on imports, increased importation of labor, the decline of infrastructure, rising administrative overheads and parallel mechanization of work to get along with fewer 'hands.' .”
After Capitalism must be considered in the context of the past twenty months ― corporate America is guilty of the systemic disregard of the most basic notions of right and wrong. Accounting deceit, executive crimes, and conflicts of interest in investment banks have defrauded thousands of employees and millions of investors; corporations continue environmental degradation while denying legal liability; corporate lobbying has been exposed to influence decisions at the highest levels of government; and popular reformist candidates were systematically marginalized in a corrupt election process ― all while income inequality is increasing. Meanwhile, despite spending over $300 billion per year on defense and intelligence, the US suffered a devastating attack by 19 terrorists armed only with pocketknives and box cutters.
Eisenhower's warnings about the military-industrial complex have gone unheeded. According to Melman, the US government spends $38 on arms for every $100 spent on other outlays, a much higher percentage than any other nation on earth. The fact that the former Soviet Union spent even more should be taken as the exception that proves the rule. This concentration of wealth has created unprecedented political power while denying resources to infrastructure and talent for the labor force. In fact, the massive managerial bureaucracy of the Pentagon, combined with cost-plus pricing [which favors cost-maximizing] and non-competitive contracting, has subverted even the military and strategic aims which created them. America overpays dramatically for weapons systems of questionable quality and even more questionable strategic value [see B-2 Stealth Bomber, V-22 Osprey, Crusader artillery system]. By his estimates, the US has spent over $5 trillion just on overkill in nuclear weapons and development.
Unfortunately, no significant economic conversion of military to civilian industry occurred after the Cold War. These expenditures continue and increase, and it's become clear that the expensive stockpiles of nuclear warheads, radioactive waste, biological agents, and chemical weapons are threats ― not contributions ― to national security. Increased defense spending may actually be decreasing our security. Meanwhile, the nation's infrastructure suffers, pollution spreads, and the macroeconomy spins further out of balance.
Melman goes beyond the calls of progressive economists like Paul Krugman, Joseph Stiglitz, John Kenneth Galbraith, and even Jeffrey Sachs. Evoking Marx, Howard Zinn, and Noam Chomsky, he argues that capitalist alienation is perpetuated by "cover stories" which aim to subvert any critical examination of the distribution of wealth and power in America. Though this sounds paranoid, it holds more than a grain of truth. Evaluate the growing disparity in content between public media [like PBS and NPR] and corporate media. This disinformation strategy, not surprisingly, extends to management-employee relations: some corporations surreptitiously edit news and wire reports on their own websites to remove negative information about their own company's products and marketing, stock analysis, and environmental violations.
Melman quotes Galbraith: “Neoclassical economics as now taught ― I do not exaggerate ― comes perilously close to being a design for concealing the reality of political and social life from successive generations of students.”
Workplace democracy has three aspects: eliminating professional corporate managers, strengthening workers' unions, and employing alternatives to corporate hierarchies for capital accumulation. First, Melman identifies corporate managers as middlemen "placed in a decision hierarchy, appointed by people above, functioning by the hierarchy's rules and not subject to decisions made by the workers ." Management, therefore, should not be confused with leadership. Instead, it reinforces a Taylorist power structure ― labor is viewed as a cost, and employee knowledge and earning power are suppressed from above. Taylor's ideas had questionable economic value during the Industrial Revolution; in an age of computerized production, continuous software upgrades, and widespread education, Melman concludes they are blatantly undemocratic and inefficient. Instead, work leaders should be selected by workers, then administer for executives ― and be accountable to both.
Second, unions must be revitalized to bring back a balance of power. Despite the decline of blue-collar unions, Melman offers a simple and compelling counterargument for their increasing importance: white-collar workers have been rushing to unionize. Aerospace engineers, nurses, teachers, and professors have flocked to unions, and medical doctors are pushing for a union. Why? These professions require both skill and latitude for judgment, and they have increasingly suffered from heavy-handed, ignorant, profit-minded corporate oversight. Additionally, temps and part-time workers have become common in high-skill occupations, partly because they eliminate labor costs in benefits and partly because these highly skilled employees have no standing of power in the company.
Third, Melman describes several forms of business venture and capital organization which can outperform state capitalism. Saturn Motor Company is a prime American example. Saturn shares all business decisions between GM ownership and the United Autoworkers Union [UAW]. The result is a combination of high quality and productivity, low price, and “the highest percentage of US-made components of any major auto company” .
Cooperative organizations can be another alternative, as he analyzes the success of Israeli kibbutzim and the Mondragon Cooperative Corporation of northern Spain. This Spanish conglomerate specializes in the production of capital goods and has $13.8 billion in assets, 30,000 members, and 1996 sales over $6 billion. Mondragon makes cooperative decisions and finances internally, from workers into a worker's bank. Significant revenue is reinvested into community infrastructure like education and healthcare.
Capital can also be organized in a democratic way. Workers can accumulate power and capital by setting up venture capital funds with their own money, having greater control over pension funds, and forsaking employee stock options for real company ownership with decision-making power.
Melman presents a large array of evidence to show that decentralized, democratic decision-making actually increases economic productivity by creating a more natural social environment, empowering workers to learn and take responsibility for solutions, and eliminating inefficiency by fostering information flow. While his focus is not on human psychology or social behavior, I found workplace democracy to be generally consistent with the economic predictions of game theory and the evolutionary theory of reciprocal altruism. Where individuals interact repeatedly, cooperation becomes the best strategy and democracy a necessity ― both politically and economically.
In sum, After Capitalism will reward the dedicated reader. Despite the complexity, workplace democracy really comes down to a simple lesson: absolute power corrupts absolutely ― therefore, no one should have absolute economic power.
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© James M. Rossi.
Jim Rossi is a writer, researcher, and naturalist. He can be reached at email@example.com.
Rossi, J. M. (2002). Review of After Capitalism: From Managerialism to Workplace Democracy by Seymour Melman. Human Nature Review. 2: 233-235.